FxWirePro: Retail sentiment flips as EUR/USD clears channel resistance

Since the beginning of Friday’s trading, the EUR/USD is showing considerable strength on the possibility of a recovery in the Eurozone from a recent slump.

• The rate has moved above the channel resistance, as shown in the graph. Gradually, it would clear up, whether this is a false break or not.  
• The pair has found support around 2018 bottom.
• One important point to note that the retail sentiment has just flipped from bearish to bullish bias, which makes the break a serious one.

Retail sentiment:

• The sentiment reports from IG Markets, which is a UK-based company providing trading in financial derivatives such as contracts for difference and financial spread betting, points to a bullish bias in the EUR/USD.
• IG markets’ retail positions data provide a glimpse to retail traders’ positions, which are largely used a contrarian indicator since retail positioning moves in opposite direction to market movements.
• As of today, according to data from IG markets, sentiment just flipped. Until today, the retail positioning was net bullish on EUR/USD. 51 percent of traders are currently net long on the USD against euro, which suggests that EUR/USD is likely to move higher. An actual breakout would see a sharp rise and further tilt in retail sentiment.  One note of caution- if the breakout turns out to be a false one, the decline would be rapid and euro would soon print 1.11 against USD. 
• On the upside, the first target 1.137 area, and then a test of 1.14